Bubble

A financial bubble is a phenomenon that doesn’t just happen in cryptocurrencies — it’s also seen in real estate, tech stocks (like during the dot-com era), and even commodities like tulips. It occurs when the price of an asset rises far beyond its actual value due to excessive speculation rather than real-world utility or earnings.

The phrase "bubble bursting" refers to the point at which this rapid price rise collapses, often leading to a steep and sudden drop in value.

Many critics argue that cryptocurrencies — especially Bitcoin (BTC) — are a classic example of a speculative bubble. Their main argument is that crypto lacks intrinsic value and has limited use in everyday life. Some even point to the infamous 2010 purchase of two pizzas for 10,000 BTC as evidence of how impractical Bitcoin was as a medium of exchange — though of course, those pizzas would now be worth hundreds of millions of dollars!

However, many in the crypto space counter that the market has already gone through multiple boom-and-bust cycles — and continues to evolve despite them.

A History of Booms and Busts

2011: The First Major Bubble

Bitcoin made headlines when it jumped from under $1 to over $30 , only to crash back down to around $2 by the end of the year. This early volatility set the stage for future cycles of speculation and correction.

2013–2015: The Rise and Fall to $172

By late 2013, Bitcoin reached nearly $1,127 , fueled by growing public interest. But by January 2015, it had fallen to just $172 , wiping out nearly $1,000 off its peak. This multi-year correction became a defining moment in Bitcoin’s early history.

2017–2018: The ICO Boom and Crash

The 2017 surge brought Bitcoin into the mainstream, with prices hitting nearly $20,000 by the end of the year. Then came the 2018 crash — what many call the crypto winter . Within just a few weeks, Bitcoin fell by 65% , and most other cryptocurrencies lost around 80% of their value. By the end of 2018, Bitcoin was trading around $5,500 .

2020–2021: Institutional Adoption Drives New Highs

In March 2020, Bitcoin briefly dropped to around $6,200 amid global market panic caused by the pandemic. However, it rebounded quickly, climbing to $13,000 by October . In 2021, institutional investors began entering the market, pushing Bitcoin past $40,000 in January and reaching an all-time high of $66,974 by October .

2021–2022: The Great Crypto Collapse

The downturn began toward the end of 2021 and continued into 2022. While prices peaked in November 2021, both Bitcoin and Ethereum experienced significant drops — Bitcoin fell about 30% , and Ethereum dropped roughly 23% from its highs.

The crash deepened in 2022 with the dramatic collapse of the Terra/Luna ecosystem , which wiped out tens of billions in investor funds. That event triggered a wave of insolvencies across the crypto industry, affecting major players like Three Arrows Capital, Celsius, Voyager Digital, Genesis Trading , and others. Many platforms halted withdrawals, marking one of the most turbulent periods in crypto history.

Summary

Cryptocurrencies, particularly Bitcoin, have gone through several boom-and-bust cycles since their inception. Each time, skeptics have called it a bubble, while supporters argue that each cycle brings more maturity to the market.

While the term “bubble” suggests irrational exuberance and eventual collapse, Bitcoin and other digital assets continue to attract attention from individual traders, large institutions, and even governments. Whether you see these price swings as bubbles or part of a developing financial revolution, one thing remains clear: the crypto market moves fast, hard, and often unpredictably.